Five Fascinating Results

Tyler Cowen alerted me to this NBER Working Paper by Sherry Glied. (Unfortunately, the full report is gated.) Based on an analysis of data from 20 developed countries, she concludes:

  1. There is no general relationship between the way in which countries pay for health care and their ability to control costs. Public v. private financing, general revenue v. payroll taxes, third-party v. out-of-pocket spending – nothing seems to matter very much.
  2. Government provision of health care is only modestly progressive. In Canada, people in the bottom two income quintiles – with 40% of the population – get about 50% of the health care benefits. Moreover, relative to health care needs, Canada's health care spending may not be progressive at all. For OECD countries generally, among people with similar health conditions, "higher income people use the system more intensively and use more costly services than do lower income people."
  3. Marginal increases in health care spending may actually be regressive. This is especially true if extra spending buys specialist services and elective procedures. "In Canada, high income people make disproportionate use of elective surgical procedures, such as hip and knee replacements."
  4. Government provision of health care has little impact on the distribution of well-being in society. When economists assign a monetary value to health care and add it to money income, national health insurance has very little impact on overall economic inequality.
  5. Increases in health care spending crowd out other government spending. Redistribution through government-funded health care partly replaces other redistributive government programs. What low-income people gain in health services may be offset by reductions, say, in housing or education benefits.

Here is the bottom line: "A mixed financing system [i.e., one that combines public and private insurance] may be the optimal way to balance efficiency and equity in health care."

Comments (12)

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  1. David Alexander says:

    My experience in Canada indicates that the health care is average at best and very expensive. An aunt waited 2 years in pain for a knee replacement. My brother in law was in hospital over 2 weeks with a broken hip waiting for a replacement. The only doctor was away at the time. Long waits for elective surgery are the norm. There are no real incentives to do more. “Near enough is good enough”.

  2. Dr. Bob Kramer says:

    The bottom line is everyone should read it, reread it, and re-reread it.

  3. Roger Beauchamp says:

    When sorting out or analyzing garbage, what is one left with?

  4. C. F. Zimmerman says:

    Just give everyone Medicare type coverage (using the existing system) and let the health savings accounts take care of the rest of the problems). The private and subsidized worlds could help each other. I have been a private health care provider for 35 years. Socialized medicine is not the same as national health insurance. For every horror story you can find about nationalized health insurance their are more with our system. If we stopped paying for our elected officials insurance you would see a solution.

  5. Jonathan Neufeld, PhD says:

    The “bottom line” given doesn’t follow from the evidence presented. I suppose if you take the “may be” part really seriously you can argue that the statement is true, but then so is every other plausible conclusion.

  6. ian says:

    So, you are you going to fix the shitty health care system then smarty mcgee?

    I see a lot of talk, but no solutions.

  7. Bill Dwyer says:

    Point #1 is irrelevant to a policy discussion in this country. What matters is that in THIS country, we are terrible at controlling costs. We need to be open to all options. In fact, almost every point above is misleading or irrelevant to our current situation.

  8. Trevor Eve says:

    I know, why not have a health care system that excludes the 50 million most ppor people in the country. Leaving those that can afford to choose from a variety of ineffective treatments, whilst pretending this is all done in a free market. That’ll keep costs down.

    Oh, oops, that’s called the McCain/Bush health policy…

  9. Jack van Dijk, Cambridge, MD, USA says:

    Referring to the Canadian health insurance proves two things, one, those people who use the Canadian healthcare systems example cannot read or speak another language than English and two, they are too dim to realize that there are at least five excellent health care and health insurance systems already for years in use in Europe.
    The principle of thinking should be different, a civilized country that claims to be the richest in the world should take care of a basic health care need for all. If you disagree with that, I invite you think (for yourself) and decide if you really belong in a church, synagoge, mosque etc.
    Yes, I have personally experience with the health care and health insurance systems in The Netherlands and Germany and yes they are excellent and yes they make mistakes.

  10. Jack van Dijk, Cambridge, MD, USA says:

    Oh, I forgot, America’s healtcare system is “do not get sick”.

  11. John Leppard says:

    Trevor –

    The system you describe is not the McCain/Bush policy, but it is, in a sense, the American health care system. The current state of the system is not the fault of any one politician or policy, it reflects more than 70 years of public policy decisions made with the best of intentions conglomerating into one big mess. There were serious problems in American health care while Bush was still cheer leading at Yale and McCain was tied up in Hanoi. One thing they do agree with is that cost is the major issue that needs to be addressed, especially if you would like to help the “50 million” “poorest people in the country” (Note: 35% of uninsured are between 19 and 35, another 20% or so live in households making over $50,000 a year). As Sen. Obama so rightly said: “People don’t have health insurance because they don’t want it, but because they can’t afford it.” Unfortunately his thinking is a little backwards on just how to make that coverage more affordable.

    Jack van Dijk –

    Your comment epitomizes what I meant about the road to our current state being paved with good intentions. I agree: any ethical person should be concerned with the welfare of the less fortunate. Unfortunately that concern implies a difficult choice. Traditionally speaking, “rights” are something intangible that CANNOT be denied you, nor does your entitlement to it infringe on the rights of others. In making health care a right, where do we define the extent of that right, as to fund it we must necessarily take the money from somewhere (someone) else? How much health care is someone morally entitled to, and at what opportunity cost? Should we divert money from schools, roads, defense, scientific research? The fundamental problem is that there is a finite amount of money at our disposal, and like in everything else we do, we must make choices with it. Can we afford an open ended entitlement to health services? As our current system is going bankrupt, I’d say no. If health care really were free, demand effectively becomes infinite. And somewhere, someone will have to make a choice and cut off supply. Will it be you? What is the “morally correct” amount of health care that should be provided?

  12. An American in France says:

    I don’t see what this guy is trying to say. I mean, yeah I get that he saying that socialized health care is bad, but what is he proposing? The current way it’s run isn’t working. I’m $14,000 in debt because of a pregnancy and I HAD insurance and I was working full time. Answer that, smarty pants.